Financing: What Does it Mean?

Thus, economics, broadly defi ned, is concerned with the production, distribution,
and consumption of services, and differs from fi nancing, which refers
to the obtaining of funds. Financial literacy is necessary to navigate daily
life, and most nurses have a working knowledge of both of these concepts,
despite not having identifi ed them with these terms within their workplace
or their professional knowledge. Here is an everyday example of the concept
of fi nancing. Please be careful to differentiate this concept from that of
economics.

Justine has just completed college. Eager to rent an apartment, she checks
the average monthly cost of housing and utilities in her region and estimates
transportation and food costs. She realizes that she will need to
clear at least $4,000/month if she lives alone, but with three roommates,
that fi gure drops to $1,000/month. Justine decides that the latter is more
feasible; she will need to fi nd a way to fi nance $1,000/month

As this general example illustrates, fi nancing refers to how the
resource comes to what is often called the agent—Justine in this example. In
health care, the parallel to the agent to whom the resources are gathered is
the payer, a concept that will be discussed shortly. Justine may have several
options for fi nancing her costs. She may fi nd a job—certainly something
most parents wish! She may instead ask for her parents to fi nance all or
part of her monthly expenses. Or perhaps she is an heiress and can live off
the interest of a trust fund. In any case, her expenses must fi rst be fi nanced.
Note also that fi nancing refers to how the money is obtained, but not what
it is used for.